A few hours before the 97th General Assembly was sworn in, the 96th Illinois General Assembly passed the Taxpayer Accountability and Budget Stabilization Act (the Act). If signed into law — and Governor Quinn is expected to do just that — the Act will raise Illinois personal and corporate income taxes for the first time since 1989.
Currently the Illinois rates are 3% for individuals and 4.8% for corporations. The Act increases those rates, effective January 1, 2011, to 5% for individuals and to 7% for corporations. These rates remain in place until 2015 when they will fall to 3.75% for individuals and 5.25% for corporations. The Act further provides that in 2025 the rates will again fall, the personal income rate to 3.25% and the corporate rate back to its old level of 4.8%.
Illinois also assesses the personal property replacement tax on corporations, trusts, partnerships and s corporations, on income, in addition to other applicable income taxes. The rate for corporations is 2.5%, meaning they will effectively pay a 9.5% tax on their income. The rate is lower for trusts, partnerships and s corps, 1.8%.
For more information on this or other tax matters, contact the Chicago tax attorneys at Horowitz & Weinstein.